Jacinta Wells, aged 33 lives in Melbourne and works as a management consultant. She is employed by Staedler Ltd, an American company specialising in the development of information systems for the publishing industry. In March 2016 Staedler won a tender contract to install a new computer system for EZI Ltd, located in Singapore. As a result, on 1 April 2016, Jacinta was posted to Singapore for one month to arrange installation of the system. Due to technical difficulties in the installation, Jacinta's stay was extended by a further three months. Initially, her salary of $8,000 per month was paid into a bank account in Melbourne. However, from 1 May her salary was paid into a Singapore bank account.
Upon completion of her work in July 2016, EZI presented Jacinta with two airline tickets and voucher for a holiday in London valued at $8,000. EZI also offered Jacinta a three-year consulting job with the company with an annual salary of 100,000 and a car.
As an incentive to join EZI, and to compensate for her leaving Staedler and having to move permanently to Singapore, she was offered $40,000. This was to be paid in two instalments -
$20,000 on joining the firm and $20,000 after one year of service. Jacinta accepted the offer on 1 September 2016.
Prepare a report advising Jacinta as to the assessability of the above amounts in Australia for the tax years 2016/17 and 2017/18.
Report Plan
Introduction
Outline roadmap of report
State that the report will be in chronological order
Issues
Foreign residency considerations
Australia Singapore tax treaty
Bank Accounts
Payments from EZI ltd assumed to be in SGD
2017 Income Year
Salary from Staedler Ltd
Voucher for holiday from EZI ltd
Is this assessable?
Terminating employment with Staedler
Unused leave accrued
Accepting the job offer from EZI ltd
Australian residency for tax purposes (1 September 2016)
Reduces tax free threshhold
Medicare levy + medicare levy surcharge
Income derived from Australian sources
Bank account interest
How does the tax treaty affect this? Is the tax rate 10%
Tax considerations relating to employment
$20,000 incentive paid upon accepting job (1 September 2016)
100,000 salary
Car
2018 Income Year
Income derived from Australian sources
Does she still have money in her Melbourne bank account?
If not, should not need to lodge an Australian tax return
Tax considerations relating to employment
$20,000 incentive paid after one year of service (1 September 2017)